McDonald's turnaround strategy is in overdrive

The fast-food chain has added some new items - like the premium sirloin burger - while altering others, like the Quarter Pounder, and announced that it will soon offer breakfast all day, among other changes.Business Insider | September 20, 2015, 12:00 IST

The fast-food chain has added some new items - like the premium sirloin burger - while altering others, like the Quarter Pounder, and announced that it will soon offer breakfast all day, among other changes.

McDonald's is hoping that the tweaks help to revive business following seven straight quarters of same-store sales declines in the US, where McDonald's is battling a pervasive public perception that its food is processed and unhealthy.

Some McDonald's franchisees have complained, however, that the menu upgrades are bankrupting them and will further complicate an already bloated menu.

Here's a round-up of some of the changes McDonald's has made over the last couple months.

1. McDonald's revamped the Quarter Pounder.

The chain recently started toasting its buns longer and increased the size of its Quarter Pounder patties from 4 ounces when raw to 4.25 ounces. The 4-ounce patties shrink to 2.8 ounces after cooking.

The company also changed how its patties are seared to lock in more flavor.

(Picture: Flickr/Adam Kuban)

2. McDonald's announced plans to start serving breakfast all day next month.

The all-day menu will be limited to only a couple breakfast sandwiches, pancakes, and sides.

McDonald's restaurants will serve either McMuffin or biscuit sandwiches - not both - depending on local preferences, according to the company. Hash browns will also be available at some restaurants.

The chain previously stopped serving breakfast at 10:30.

3. The company is expanding its customizable burger menu, called "Create Your Taste," to thousands of restaurants nationwide.

The menu allows people to customize their burgers with premium toppings like guacamole, grilled mushrooms, onions, bacon, and chili-lime tortilla strips, using touch-screen kiosks.

(Picture: Hollis Johnson/Business Insider)

The chain is also now offering a limited version of "Create Your Taste" to drive-thru customers called "TasteCrafted," where people can pick a bun and a premium sauce.

4. McDonald's vowed to remove all antibiotics vital to fighting human infections from its chicken supply within the next two years.

The company also promised to shift to cage-free eggs in the US over the next 10 years.

5. McDonald's started testing a new ground chicken burger.

The new chicken burger is made from a blend of white and dark ground chicken seasoned with spices like garlic and onion powder. It can be ordered in two varieties: "classic," with red onions and ranch sauce; and "tangy," with grilled onions and a tangy "signature sauce."

(Picture: McDonald's)

The sandwiches, which are each under 400 calories, also come with lettuce and tomato on a new "gourmet" potato bun.

The sandwich was rolled out in all 202 of McDonald's Tampa locations.

6. The company launched a new buttermilk crispy chicken sandwich made with real buttermilk.

7. McDonald's stopped using margarine on its breakfast sandwiches, and replaced it with real butter.

8. The company reintroduced Premium Chicken Selects, which cost $2.99 for a three-piece order, compared with $1.99 for a four-piece Chicken McNugget order.

The Premium Chicken Selects are made from whole pieces of chicken tenderloin that are breaded and fried, whereas McNuggets are made from ground chicken meat.

9. McDonald's vowed to remove a number of hard-to-pronounce ingredients from the grilled chicken used for sandwiches and wraps, and rename it "Artisan Grilled Chicken."10. McDonald's started testing kale as an ingredient in breakfast bowls at nine southern California locations.

Kale is also being used in three salads at McDonald's in Canada, according to Janney Capital Markets.

The addition of kale to McDonald's menu came as a surprise, considering the chain's anti-kale sentiment in an ad that the company released earlier this year.

The ad shows close-up shots of a Big Mac and pokes fun at foodies and vegetarians.

"You can't get juiciness like this from soy or quinoa," the ad's narrator chides. "Nor will this ever be kale," he adds as the camera zooms in on the lettuce in a Big Mac sandwich.

11. McDonald's tested a premium sirloin burger, but decided to phase it out when it didn't meet sales expectations.

The limited-time item was introduced in May.

The burgers, made with 100% sirloin, featured the biggest meat patties on McDonald's menu. They were served on wooden boards meant to signify their premium quality, along with fancy toppings like grilled mushrooms, white cheddar cheese, and peppercorn sauce.

The failure of the pricier sirloin burger could be a troubling sign at a time when McDonald's is repositioning its brand around more premium offerings.

"Create Your Taste" could also run into some obstacles.

Customers can only order food from the "Create Your Taste" kiosks by walking inside its restaurants, and McDonald's reportedly gets as much as 70% of its sales from the drive-thru, QSR magazine reports.

"The reality is that it doesn't apply to the 70% of customers that choose the drive thru," Richard Adams, a former McDonald's franchisee and president of Franchise Equity Group, told QSR. "At a cost of $100,000-$150,000 per restaurant to implement, it has a limited upside. I think this is more a stunt to appeal to Wall Street investors instead of being practical for the restaurant operator."

(Picture: Reuters)

The kiosks are expected to cost franchisees between $120,000 and $160,000 to implement.

Franchisees have also voiced concerns about all-day breakfast.

The chain has previously said it doesn't serve 24-hour breakfast because its grills aren't big enough to handle breakfast and lunch items.

"It comes down to the sheer size of kitchen grills," the company said on its website. "They simply don't have the room for all of our menu options at one time - especially considering we use our grill to prepare many items on our breakfast menu."

Franchisees are adding equipment like extra grills and toasters to accommodate the new breakfast hours.

If the new items are anything like the McWrap, they could further slow down service - which is already at its slowest point in at least 15 years, according to a study by QSR Magazine.

(Picture: Reuters)

Al Jarvis, a McDonald's franchisee of nearly 50 years, told Bloomberg Businessweek that complicated new menu items like espresso drinks and the McWrap caused chaos in his kitchens, dragged down food quality, and led to excessively long lines at the drive-thrus - which is a death sentence in the fast-food industry.

He said he loved his job with McDonald's, but as he neared the 50th anniversary with the company he had worked for his entire life, he realized he couldn't go on.

"I wanted to get the hell out," he told Businessweek.

Jarvis sold his stores and left McDonald's in November 2014.

"I don't think they know what they want to do," he told Businessweek of McDonald's executives. "They're saying, 'Let's go back to basics.' Then they're doing these customized burgers, and they're talking about all-day breakfast."